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I'm a young highschool student in Canada. I work part-time, and not until now have I considered saving money for retirement. I am aware of mutual funds, RRSPs, bonds etc. And currently have about 5,000 sitting in an education bond funded solely by me earning pitiful interest (like 5 cents a month). I was wondering if I should remove this 5,000 from my bond and instead place it in an index fund or RRSP and continue to place 100$ in it per month until I can afford to put more in it and leave it untouched and allow compound interest to work its magic. However if I leave the money in the education bond, the government will match quite a bit of it for my education (although I heard this causes problems with recieving student loans) and if I remove it, it could be taxed (please correct me if I am mistaken). Thanks a lot, I appreciate your input.
IMHO, This must be addressed first in the context of what to do with your current money.
As to your first question [ie, at what age to retire], that depends on what career field you go into. My career field forced me out and onto pension after 20 years. So I planned our investments on that time frame.
When my employer forced me out to pasture at 42, our investments were mature and between the two we have been able to live mortgage free, only work if we desire to. so we have began farming.
Some folks will retire at 38. Others will pick some date after that [like I did]. Some folks will not retire until they reach 65. Many folks refuse to have any other investments, so they will likely not be able to retire when once they on a pensioner.
Location: Finally escaped The People's Republic of California
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As Forest said,
Depends on if you want to go to college, Your saving for it you should go, it can only help you. Once you start the workforce, save from day one, then when your 50, look and see what you have.....
If you are in highschool, and honestly considering setting your sites to plan for your future retirement; I would seriously suggest that you think about the career fields that provide a 20-year pension.
[Now I began my career at 18, then after six years I quit and went to college, then four years later went back into the same career field. So instead of completing my 20-year career at 38, I completed 20 years at 42.]
I attended my 25th year high school re-union. At the time I had been on pension for one year. I was the only person there who was already on pension. At my 30th highschool re-union I was still the only person on a pension.
I could have pursued a follow-on career path, most folks do. But we focused on a plan to allow our investments and my pension to support us at this point instead.
Location: We_tside PNW (Columbia Gorge) / CO / SA TX / Thailand
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Saving for retirement...earlier the better for benefit of compounding, not sure of tax benefits in Canada. My kids started their ROTH Iras's (tax advantaged in USA) at ~ age 14, with earned income from farm / investment property maint. The both borrowed for college, one pays 2.7% on 20 yr loan, other pays 4.7%, they are not paying off early, but have the money to do so if necessary. They also each learned a trade + college for professional degree, thus they can do either. I made them each build a house from scratch (which they hated) so they would learn some life skills. I am not impressed with their choices of employ, but they make their own choices.
I would look at Forest's recommendation with a keen eye... I wished I would have followed my heart in my 20's and I would have done the same, but... I got the responsibility of caring for a parent from age 18 to age 50, so I unwisely stayed with a great company (secure job) that paid for my degrees and helped me save, but... pulled the rug out from under me after 32 yrs service, but 6 wks shy of retirement eligibility.
Think through your choices and get some 'seasoned advice'. Look to the 'end game', but enjoy the journey. Systematically save early, and be disciplined. Invest in diverse but growing areas. I think the stats are- save $5,000/ yr from age 20-30 then stop adding OR $5000/ yr from 30 - 65 = same ending amount @ age 65.
IN USA, the amount you have in retirement accts does not count against your student loan obligation or available funds, but ANYTHING you have in savings or equity is considered 100% available for school... I had my kids 'shelter' their assets be sticking them in ROTH Ira (Which you can pull principle after 5 yrs), but hopefully they will not have to draw on the Roth to pay for low interest school loans.
Last edited by StealthRabbit; 05-12-2008 at 01:31 PM..
How amazing that the original poster has so much foresight! If only I'd had one-tenth of it...
My thought, yes, school is very important. But if the student could put even $1000 in a Roth and forget about it, he/she'd be golden.
A friend of mine who doesn't make a lot of money insisted that his teenage son put $2000 in a Roth in his senior year of high school. That kid will hardly have to consider saving for retirement, with years of compounding! Of course, he'll likely add to it when working after college, but what a headstart.
Once you really get the power of compounding- and realize that the one thing you cannot change is time passing- it's really good to get going *today*, not tomorrow (and certainly not if you didn't get going yesterday).
Again, hats off to the young person with so much foresight. It will go really, really well.
I thnik once you get your education and start your lifes work it is time to plan the future and that includes retirement.Right now conscentrate making a careeer choice that will allow to to achieve your plans.
Start by always putting a little bit away every paycheck and as your paychecks grow increase the savings. I had a separate savings account to use for splurges but my other accounts were long term do not touch accounts. After 25 years of working I have a nice cushion.
I thnik once you get your education and start your lifes work it is time to plan the future and that includes retirement.Right now conscentrate making a careeer choice that will allow to to achieve your plans.
Once you cast your dice, then look at those dice to determine how you wish to sail?
Respectfully I disagree.
For this young person, the dice have not yet been cast.
Considering now, this person has far wider variables as options.
To pursue an education that looks into a careerfield of working until they are 65? Ick.
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